Refurbished phones are getting a lot of love as the price of new handsets soar

With the pricing of new flagship handsets now firmly planted in four digit territory, it appears that demand for refurbished models is stronger than ever. According to a report in today's Wall Street Journal, previously owned Apple iPhone and Samsung Galaxy S smartphones are being purchased by consumers who are getting turned off by the same sticker shock that affects new car buyers. Shipments of new smartphones hit a historic low during the fourth quarter of last year. From October through December 2017, shipments of smartphones actually declined for the first time ever during any three-month quarter.

As consumers decide to spend a few hundred dollars on a "refurb," this is taking business away from manufacturers who generate their largest profit margins on new-device sales. Industry executives say that a new phone today will go through four different owners before ending up in the scrap heap. And the buyers of these "previously loved" handsets are no longer found mostly in developing markets like India and Africa. Now, 93% of those buying second-hand smartphones via on-line auction house B-Stock are from the U.S.

Back in 2014, when carriers subsidized phone purchases and two-year contracts were the norm, U.S. consumers were upgrading to a new phone every 23 months according to BayStreet Research LLC. The research firm says that the latest data shows Americans upgrading every 31 months and that figure is expected to hit 33 months next year.

Some device makers like Apple do profit from refurbished iPhone units as purchasers add paid apps from the App Store, buy content from iTunes and use Apple Pay (on newer models) to ring up retail transactions. Apple CEO Tim Cook, well in sync with this trend, said during the company's February 1st conference call that the reliability of the iPhone has generally been "fantastic." Having said that, Apple had to throttle the CPU on some older models as weaker batteries forced these units to shut down during certain complex tasks. The tech giant issued a mea culpa and discounted the price of a battery replacement by $50 to $29 for the rest of 2018.

As for Samsung, mobile chief D.J. Koh says that the company might adjust its strategy due to the popularity of previously used phones. Instead of offering new, lower-cost models in some regions, the executive says that Samsung could decide to offer refurbished Samsung flagship units in those markets.

source: WSJ

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18 Comments

1. surethom

Posts: 1662; Member since: Mar 04, 2009

eBay has been my go-to for every mobile phone for the last 13 years, I get a new one almost every year. I have saved myself thousands.

2. DolmioMan

Posts: 314; Member since: Jan 08, 2018

I doubt you’ve saved yourself thousands.

4. Crispin_Gatieza

Posts: 3123; Member since: Jan 23, 2014

You could save a Grand in just 5 years. Knock off $200/year and you're there. This man's been doing it for 13.

11. Boast_Rider

Posts: 534; Member since: Sep 14, 2017

Would you call it savings though. He would be spending about the same as the guy who changes his phones less often but goes for new ones.

3. Settings

Posts: 2943; Member since: Jul 02, 2014

Buying last year's flagship is a wise move too.

7. Crispin_Gatieza

Posts: 3123; Member since: Jan 23, 2014

Absolutely. No different than the coin you save on a car by getting a 1 year old lease return. Still get A-rated financing and the remainder of the bumper to bumper warranty. That's being smart, not cheap.

5. Jrod99

Posts: 713; Member since: Jan 15, 2016

That’s why I hang on for 3 years now. No need to upgrade every year.

6. Stormrider

Posts: 66; Member since: Aug 30, 2016

How about they "adjust their strategy" by asking for reasonable prices instead of mindlessly following ridiculous trends.

8. Duncdawg26

Posts: 170; Member since: Jan 20, 2017

I can't understand why companies can't make anything more affordable. The sd410 and 425 get used for several years and each year get a little cheaper. But no other chip gets treated like that. They could be mass producing sd625 chips to make some cheaper phones but instead they come up with another new chipset like the SD450 and charge more money for an inferior chip just because it's new...?

14. nokia12

Posts: 610; Member since: Nov 19, 2013

it's not like that .. Sd 625 costed more money as it belong to a higher price bracket at start plus new expensive 14nm process .. after a year or so when it has been mass produced a lot, economies of scale caught up, with some minor features cut and reduced price it is rebranded as SD 450.. and SD 625 is discontinued... making way for SD 630 .. in rare occasions you may find SD 625 phones cheaper than Sd 450 phones but that price is given by phone manufacturer usually when they have old stock left out to clear etc and they sell at no/very less profits to get rid of it , a phone is just not a SOC there are other parts as well SD 410/425 has been reused and had longer life because they have been the same Quad core A53 on 28nm and they are updated more slowly.. like we still don't have a successor to 425/427 yet .. Quad a53 .. so manufacturers have no choice but to use that ,

16. tokuzumi

Posts: 1865; Member since: Aug 27, 2009

I just buy on Swappa. Hasn't let me down yet. eBay and Craigslist have been a mixed bag.

17. 47AlphaTango

Posts: 718; Member since: Sep 27, 2015

This doesn't only worked on smartphones. But also on tablets, gaming laptops, and even automobiles! Most people who prefer buying refurbished stuff saves a lot of money!

19. ShadowHammer

Posts: 201; Member since: Mar 13, 2015

I would just say, make sure and read the fine print and check the warranty. Most refurbished units have a 90 day or 30 day warranty, vs the one year of new stuff (two years for ZTE). I got a refurbished LG G4, it bootlooped within the 90 day window, got a replacement, and that bootlooped 6 months later. SOL. I realize the G4 had a known manufacturing defect, but the point is still made that you take some extra risks with used stuff. I've had good luck too. Still have a LG G2 that was refurbished, and a LG G5 that seems fine (fingers crossed). My next phone purchase will probably be a refurbished LG V20, so apparently I'm still willing to take the risks to save a bit.

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